[A-List] US imperialism: popular front potential

[Keaney Michael]

Gaining ground
India's acceptance of genetically modified cotton marks a breakthrough for the biotechnology industry in the developing world, says John Mason
Financial Times: March 27 2002

Genetically modified crops are poised to make a breakthrough in two of the biggest agricultural economies. India on Tuesday approved the planting of genetically modified cotton and Brazil could well reverse its opposition to gene technology within weeks. The two moves together would herald a substantial shift in the future of world farming.

In backing the use of BT cotton, a genetically modified strain resistant to the devastating boll-worm, India is encouraging farmers to use biotechnology to raise their competitiveness towards the levels of China and the US, fundamentally changing the dynamics of the world cotton trade.

In Brazil, two federal appeal court judges are expected any day to announce whether they are joining a colleague in removing an injunction that prevents the pro-biotech government allowing the cultivation of GM soyabeans.

For Monsanto, the US company supplying the seeds in both cases - in India through a joint venture with Mahyco, a local seed company - huge new markets are opening up. For environmental campaigners such as Greenpeace, such decisions can only be a setback.

India and Brazil have become the two causes cele`bres in the international adoption of biotech. Of the big developing world economies, they have hung back from the new technology, while China, Argentina and South Africa have embraced it with enthusiasm.

Other developing countries, such as the Philippines and Thailand, could follow suit to approve further commercialisation of genetically modified products and boost their own biotech research programmes.

Victory for the biotech industry in Brazil and India would still leave many issues unresolved. The circumstances in the two countries are very different, as are the changes they could prompt. Despite the efforts of campaign groups, there seems to be little consumer opposition to wearing fabrics made from genetically modified cotton. Food containing genetically modified products is another matter.
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European consumer concerns centre primarily on health worries, with anxieties over the environment in second place. In contrast, most scientists are more concerned about the environmental impact of GM crops, particularly on biological diversity.

With the likelihood of little protest from consumers, even environmentalists agree take-up of genetically modified cotton by Indian farmers will be substantial. "Farmers everywhere are in a bad situation over low prices," says Doreen Stabinsky of Greenpeace. "Whenever you see these crops come to market you see significant take-up because farmers see it as their salvation."

For companies such as Monsanto, that means potentially huge commercial rewards. India is the world's third largest cotton grower, producing 5.2m tonnes a year compared with 14.6m in China and 11m in the US. Yet productivity is low, with almost twice as much land area under cultivation as either of its rivals. "Monsanto should get its money back within three or four years," says Channapatha Prakesh, director of the centre for plant biotechnology research at Tuskegee University, Alabama, US.

But there is still some debate over the extent to which the farmers themselves will benefit. For example, BT cotton contains a gene, transferred from bacteria, that makes the plants toxic to insects. Yet some argue that pests will develop resistance to the toxin. If so, the argument goes, the BT plants will eventually become useless, leaving farmers back where they started.

This problem could be compounded by India's low literacy rate and sheer grinding poverty, which some fear could produce widespread non-compliance with crop management regimes demanded by seed companies. According to Nuria Urqua, a plant scientist with the United Nations Food and Agriculture Organisation in Rome, which remains cautious about the benefits of biotechnology, such non-compliance could bring forward the day when the product becomes redundant.

The long-term economics for producers are uncertain. Costs of biotech crops could rise over time, leading farmers to revert to planting older types of seed, says Ali Gurkan, an FAO economist. "What happens in the next one or two years may be entirely different to 10 years down the line," he says.

Prof Prakesh agrees that the resistance problem is real but says it would be less of a threat in India than in the US, where farming is far less mixed and more intensive than in Asia. He says the resistance issue is inherent in all plant development, biotech and conventional, and that the solution lies in the private sector's constant development of new products. "You don't stop using a knife just because it gets blunt," he says.

The decision over Brazilian soya, engineered to be resistant to herbicides, is poised to have the widest effects - for the simple reason that it will doubtless attract the attention of European consumers. In stark contrast to their US counterparts, Europeans are generally hostile to genetically modified foodstuffs. Brazil is the world's second largest soya producer after the US.

Brazil has benefited from selling non-genetically modified soya to Europe. How it would cope with trying to supply both products is unclear. For example, it has yet to build the costly infrastructure to segregate the two types of crop.

Moreover, Brazilian approval of genetically modified soya would severely test the attitude of European consumers and the credibility of the European Union's policy of developing contamination thresholds in non-genetically modified food.

A substantial take-up by Brazilian farmers would lead to a parallel market in commodities, says Mark Mansour, a food lawyer with Keller and Heckmann, the US law firm. "Once you get a price premium for non-GM [genetically modified crops], it will test the tolerance of European consumers. Then we will find out just how deep is the tendency of Europeans to reject GM. We don't know that answer yet."

This could pan out differently across Europe, with France and Italy remaining hostile but the concerns of British and German consumers weakening, Mr Mansour suggests.

For Europe's food regulators, the worst scenario would be for a large European food company to have a non-genetically modified product fail the EU's threshold tests amid a blaze of publicity. The reputation of food producers and regulators would then come under scrutiny.

Most in the biotech industry assume that European hostility will remain strong for some years. For the companies - the Swiss-UK Syngenta and French-German Aventis as well as Monsanto and Dow of the US - the European market is important but not absolutely critical.

One of Monsanto's rivals plans to expand seed sales in Latin America, Asia and Australia but expects to do no business with European farmers for up to 10 years. However, the dislocating effects on world commodity trade of continuing European resistance could be severe, the company acknowledges.

Others see Europe as a critical factor for farmers in the developing world in deciding which crop to plant. Countries such as Thailand and Namibia have already scaled down their use of genetically modified foodstuffs to keep their European markets and will remain wary.

Even ardent supporters of biotech such as Prof Prakesh say that in spite of the huge significance of approvals by Brazil and India, Europe remains the key to genuinely widespread adoption of the technology.

"It is a huge and affluent market that imports food from all over the world. The science began in Europe [with the discovery of DNA] and Europe will dictate the future of agricultural biotechnology."

Full article at:
http://news.ft.com/ft/gx.cgi/ftc?pagename=View&c=Article&cid=FT3OX5Z5AZC&live=true

Michael Keaney
Mercuria Business School
Martinlaaksontie 36
01620 Vantaa
Finland

michael.keaney at mbs.fi